captioning sponsored by macneil/lehrer productions >> lehrer: good evening. i'm jim lehrer. president obama appointed elizabeth warren to set up a new consumer financial protection agency. >> woodruff: and i'm judy woodruff. on the newshour tonight, securities and banking experts lynn stout and bert ely assess the appointment, and the implications for both consumers and banks. >> lehrer: then, two stories from afghanistan. ray suarez looks at the preparations for tomorrow's parliamentary election. >> woodruff: and james foley of global post has a rare, on-the- ground view of a taliban ambush of an army infantry company in kunar province. >> lehrer: jeffrey brown gets some perspective on the middle east peace talks from glenn kessler of "the washington post." >> woodruff: kwame holman

reports on how social conservatives are trying to shape the republican message for the fall campaign. >> i think we've reached a situation in a country where people are alarmed, scared. they're up set. and they're stirred up. >> lehrer: and mark shields and david brooks provide their weekly analysis. that's all ahead on tonight's newshour. major funding for the pbs newshour has been provided by:

and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs

station from viewers like you. thank you. >> woodruff: one of wall street's leading critics, elizabeth warren, will now fashion a new oversight agency. the president announced the appointment today, but he steered clear of a confirmation fight with the senate. ( applause ) just two months ago, the president signed the financial reform bill that authorized a new consumer financial protection bureau. today, in the white house rose garden, he said the job of turning the concept into reality will go to "one of the country's fiercest advocates for the middle class." >> the consumer financial protection bureau will be a watchdog for the american consumer, charged with enforcing the toughest financial protections in history. now, getting this agency off the ground will be an enormously important task, a task that can't wait.

and that task is something that i've asked elizabeth to take on. secretary geithner and i both agree that elizabeth is the best person to stand this agency up. >> woodruff: elizabeth warren is a harvard law professor and bankruptcy expert. for two years, she chaired the panel that oversees tarp, the federal bank rescue fund, before resigning that position today. along the way, she even took on secretary geithner at a tarp oversight hearing in june on the administration's efforts to stave off foreclosures. >> what is the metric for success here? is it 120,000 families saved over 15 months at a time when 186,000 are posted for new defaults and foreclosures every month? >> these programs were not designed and could not have been designed responsibly to try to

prevent a set of foreclosures that, tragically, were probably unavoidable. >> woodruff: warren has been hailed by consumer groups and many liberal activists. one group even went so far as to produce a rap video in support of her nomination. >> ♪ sheriff warren's what we need, yo... ♪ ♪ >> woodruff: today, in a blog post on the white house web site, warren spelled out her view of the new mission she's taking on. she said: under the new law, the bureau will have the power to regulate mortgages, credit cards, loans and other financial products. warren's appointment allows her,

in effect, to serve as unofficial head of the agency until 2012 without senate confirmation. in that way, the president avoided a fight with senate republicans, who could have blocked a confirmation vote. the move brought criticism, including this statement from republican spencer bachus, on the house financial services committee. major business groups also opposed the appointment. david hirschmann of the u.s. chamber of commerce said warren's ideas about regulation could end up hurting consumers. >> the issue is more what will she do with this power. if this is taking away choices for consumers and restricting credit in the marketplace, count us out. >> woodruff: the consumer

protection bureau's first task will be a forum on mortgage disclosures next tuesday. for a closer look at elizabeth warren and the new agency she is to get up and running, we turn to two people who have followed developments closely: bert ely is a banking industry consultant who heads his own firm in northern virginia; and lynn stout is professor of corporate and securities law at the university of california, los angeles. thank you batt for being with us. lynn stout i'm going to start with you, we are just heard two voices critical of elizabeth warren, why do you think she is the right person for this job? >> she's very clearly the right person for the job because she thought up the job. elizabeth warren has been tracking problems with consumer protection in borrowing practices for many years. she's one of the first people to identify that this was a cause of personal bankruptcies and that people were gettinging into trouble unnecessarily and through fraudulent and predatory practices. and indeed the entire agency

is her idea. she really is someone very dedicated to making sure that consumer lending is done on a fair basis, on the basis of full disclosure. it's really hard to imagine anyone would do a better job than she would. >> woodruff: bert ely, nobody better to look out for fairness for the consumer. >> well, i think the concern that, first of all, she is not going to be really running the agency because she is just involved in helping to get it set up. the president did not make a commitment to nominate her, to be the direct are of the agency. and quite frankly, she may end up not being the director of the agency but merely a transition figure to kind of get the mechanics of it going. >> woodruff: but what about her qualifications for this job. >> she is certainly very knowledgeable about the issues. but the concern is that a lot of her action was actually discourage banks and others from lending to consumers because of the

rules that will be put in place that will actually make it very risky for banks and others to lend to consumers other than those who have absolutely critical clean credit records. >> woodruff: what is an example of a rule that you'd be worried about? >> well, i think the rules having to do, for instance w disclosures. the reason that consumer disclosures for lending products are as complicated as they are as much as anything else is because of the way congress has written the laws. and what i would be concerned about is that in addition, that complexity, that despite her attempt to bring simplicity to it, there would actually be increased complexity and legal traps for lenders that would cause them to back away from many types of lending decisions. >> woodruff: lynn stout is that a danger that she would go too far in putting these regulations forward? >> well, you know, it's an interesting concept that you

can go too far in preventing fraud. the reality is, is any consumer who has ever gotten a credit card statement or looked through mortgage documents knows that they're written in a fashion that is almost impossible for people to understand. and frequently they are all of tricks and traps as ms. warren has put it her brief is simple and clear. she just wants consumers to be treated fairly and honestly. it's pretty hard to see why there could really be much objection to that. >> woodruff: is it something about her, bert ely that has caused this strong opposition from the banking industry? >> well, she is a lightning rod in terms of a lot of the comments that she's made. again the tricks and traps. certainly that has gone on. but you know she characterizes the ideas of all lenders are operating that way. and i would contend that that is not the case. and what many of these tricks and traps, so-called the complexity of a lot of consumer lending agreement is again reflecting the law

that congress has written and the difficulty that people have in understanding a lot of these agreements again is reflecting really congressional intent. >> but you're saying she would just be carrying out the laws that have been passed. >> she might be carrying out the laws that have been passed but again there a lot of room for interpretation. and the concern is that she would put additional rules and complexitys in place that would make it reluctant for bankers to lend in many circumstances. >> woodruff: and lynn stout, that doesn't concern you? >> not particularly. it's interesting, the banking industry's reaction has really been dominated by some i would say strident and almost alarmist voices that have raised a lot of fears that don't seem to be grounded in any real evidence. elizabeth warren is a very sensible, plain-spoken person. in fact, the fact that she is plain-spoken that some people seem to object to. but you know, she's very straightforward. and she, when she sees a problem she calls it a problem and when she doesn't see a problem, she's very reasonable.

and i think really more than anything what is going on is that the banking industry is simply concerned because they don't know exactly what she'll do. and they're concerned that she's not in their pocket. i don't think there is any evidence. we've had two years of seeinging her oversee the tarp oversight committee and she seems to be a very competent and careful and politically savvy leader. >> woodruff: you're shaking your head yes, that that is some of the concern. >> there are concerns about that, but in many ways it may actually be moot. because if she is not ultimately nominated and confirmed to be the director of the agency, then she's never going to get into the rulemaking business. but instead is going to basically be kind of an administrator, getting the agency up and running. getting at least some of the people in place. and again. >> rooney: . >> woodruff: you're saying she will have less power, you believe, because she's not the permanent one. >> she will have less power

because she is an advisor to the president. she wouldn't even be the acting director of the agency. and quite frankly, if she stumbles during this initial period of time a that would actually greatly hurt her chances of eventually becoming or even being nominated as director of this agency. >> woodruff: professor stout, i want to read-- even senator countries dodd the chairman of the senate banking committee who placed the appointment today said in a statement, he said the teeth that this new bureau needs to put strong pro tekt-- protections in place won't be there. and he said it could leave the entire bureau in jeopardy. he's worried about the fact that this is just an interim appointment. >> again, that sounds a little bit like an alarmist view. 18 months is a good long time. she can get an he nor moution amount done. and during that period i ink this is also very important. the lending industry i think will have greater experience with her. and some of their more out-there fears will be alleviated. it seems to me very possible

that at the end of 18 months she will receive a permanent appointment and i think the banking industry will be glad of it i think it's important to bear in mind that as mr. ely has said there are responsible lenders out there. being a banker was once an honorable profession. and putting down some rules of the road that prevent predatory and fraudulent practices is actually good for the honest businesspeople out there. and that is what she really has said she's goinging to do. i expect that's what she will, in fact, do. >> you think you can could end up being surprised? >> we could end up being surprised. i mean anything is possible. the sun could rise out of the west. but i certainly don't have very high expectations in that regard. nor do i think bankers, i think there is a lot of concern about her in terms of what she has said in the past. i can point out something else that going to be a problem for her in terms of getting this agency going. and that is the difficulty she will have in attracting really good people for the

senior positions because they will be unsure about who they would eventually be working for. and so this is one of the reasons why this agency will get off to a rocky start. because of the lack of a person nent confirmed director. >> woodruff: all right, we are going to be watchinging it closey and we're going have to leave it there, bert ely, lynn stout, thank you both. >> thank you. >> thank you. >> lehrer: still to come on the newshour: an afghanistan elections preview; and an afghan firefight on the ground in kunar province; this week's peace talks in the middle east; social conservatives in the republican party; and shields and brooks. but first, the other news of the day. here's hari sreenivasan in our newsroom. >> sreenivasan: wall street managed to keep its september rally going, as stocks eked out small gains. the dow jones industrial average added 13 points to close above 10,607. the nasdaq rose 12 points to close at 2,315. for the week, the dow gained nearly 1.5%; the nasdaq rose

more than 3%. united and continental airlines have moved a giant step closer to creating the world's largest air carrier. shareholders of both companies voted today to merge. the $3 billion stock deal could be finalized within two weeks. the new airline will be called united, and will eventually be based in chicago. it will be run by continental c.e.o. jeff smisek. hurricane karl plowed into central mexico's gulf coast today near veracruz, with winds of 115 miles an hour. officials reported widespread damage. the storm's track took it past laguna verde, home to mexico's only nuclear power plant. the site was shut down as a precaution. the government also ordered the closure of 14 oil production wells, and the heavy seas and high winds forced evacuations of oil platforms. in london, british police made a series of arrests in a possible plot against pope benedict xvi. acting on a tip, they arrested six men on day two of the papal visit. we have a report from simon israel of independent television news. >> reporter: "out of the blue"

was how one security source described it. they had no warning, no surveillance, no knowledge of any direct threat to the pope before yesterday. today's arrests may simply have been a precaution, but no one is taking any risk. the raid on a street cleaning depot behind this car park took place at quarter to six this morning as five men, some algerian muslims, were finishing their shift. armed officers were present. the arrests were carried out by the counter-terrorism command on suspicion of the commission, preparation or instigation of acts of terrorism. detailed forensic searches have been going on for most of the day. the suspects, aged between 26 and 50, worked for a company called veolia, an environmental services contractor to westminster city council. one of it's senior officers insisted the council and the company worked closely to ensure that all 650 street cleaners underwent home office checks.

scotland yard's announced that a sixth man had been arrested at a house in north london. given the past history of threats to the pope's life, the last serious attempt being in '81 when a turkish national fired four shots at pope john paul in rome's st peter's square. immigration checks are being carried out and mi-5 is looking whether any have links with al qaeda or group as broad. >> sreenivasan: vatican officials said the pope's visit will go ahead, with no changes in the schedule. an explosion in sri lanka's capital killed 25 people today, most of them police officers. three containers filled with explosives blew up outside a police station. the explosives had been meant for road construction. government officials ruled the blast an accident. the area was once controlled by the tamil tiger rebels. they routinely carried out bombings during a 25-year insurgency.

an american scientist and his wife are now accused of plotting to help venezuela develop a nuclear weapon. the pair once worked at los alamos national laboratory in new mexico. they were arrested today. a federal indictment said they tried to pass nuclear secrets to an fbi undercover man posing as a venezuelan agent. those are some of the day's major stories. now, back to judy. >> woodruff: even in the midst of a war, afghanistan is preparing for another election. and as ray suarez reports, violence and the potential for fraud loom over the process. >> suarez: in panjshir province this week, a whole new meaning to campaign "trail." a different breed of election worker hauled ballots to remote villages for tomorrow's parliamentary election, when 2,500 candidates will vie for 249 seats. in afghanistan, with its rugged mountains and few paved roads, the four-legged ferries are a necessity. >> ( translated ): we've walked for five hours to carry this election material back to our

area by donkey. it's so our people can participate in the elections and cast their votes. this will enable them to be hopeful for a peaceful, prosperous, happy and safe future after this election. >> suarez: that fervent hope has been tested by a surge in violence. an independent afghan group, financed by western nations, reported at least 1,350 attacks in august alone. that's more than double the same period in 2009. the election was postponed from may due to security and logistical concerns. and now, the violence and intimidation threaten to limit turnout, with the taliban warning voters to stay away. the militants claimed today they had kidnapped 30 people tied to the vote-- poll workers, election officials, and even a candidate for parliament. in response, the country is locking down to gear up for the vote. checkpoints dotted the capital, kabul, today, reassuring some

likely voters. >> it is a positive sign that we see our police forces there on the streets and checking vehicles and cars everywhere to provide a secure environment for the people of afghanistan to go to polls tomorrow. >> ( translated ): whatever the security situation will be, tomorrow, we will cast our votes and we will choose our favorite candidate. >> suarez: that enthusiasm is reflective of a longstanding democratic verve, says clare lockhart, who helped stand up afghan institutions after the fall of the taliban. she now travels to afghanistan as a co-founder of the institute for state effectiveness. >> afghan culture is no stranger to democracy. the system of consultative, deliberative democracy that's indigenous to society through the shura system actually predisposes the population to understand, participate in elections. we've got to remember, at the

village level, there's been over 28,000 elections for village councils over the last few years. so elections for parliament are part of that process, and i think it underscores again the importance of the political process. >> suarez: but the last national election-- the august 2009 presidential vote-- was marred by widespread fraud, which mostly favored president hamid karzai. karzai was ultimately declared the winner after his chief rival, abdullah abdullah, bowed out of a run-off. he claimed a fair vote was impossible under the karzai- controlled election system. now, abdullah is urging voters to turn out. and today, karzai also urged his fellow afghans today to go to the polls. >> as elections are all over the world, we are going to face difficulties. therefore, it's very important that the afghan people come out and vote and have trust in their vote. >> suarez: clare lockhart says there is a potential upside for karzai in this election, even if

he's not on the ballot. >> he stands to gain measurably from presiding over a process that is seen to be fair and legitimate. i think, in the long run, he and his government stands to gain from a parliament that can carry out the functions that parliament is meant to-- as a check on executive power. >> suarez: with ten candidates standing for each seat in parliament, the vote counting process is expected to take at least six weeks. initial results are due at the end of october. >> lehrer: now, a real world glimpse of what afghanistan looks like to the american troops fighting there on the ground. our report comes from james foley of global post, the international news web site. he was with an american infantry unit that was ambushed recently in kunar province, where u.s. and taliban forces often confront each other.

a warning: this report contains graphic pictures and language. >> much of the u.s.'s military attention has been focused on kandahar. the flab stronghold in the southwest of the country. but am kunar provincial in the northeast the fire fights have been just as fierst. the areas mountainous terrain and proximity to pakistan made it an haven for insurgents. infant ree many from the 101s first brigade have been almost under constant attack since may. in june alone they lost seven troops to ieds and suicide attacks. and two more have been killed in fire fights and rocket strikes . alpha company has fought back with withering firepower reportedly killing scores of enemy while avoiding any civilian casualties but the attacks keep coming. in late august second platoon soldiers were preparinging to patrol to survey polling sites for the upcoming provincial election. they were passing a

well-known ambush site when they were hit by a coordinated attack from the surrounding cliffs . >> initially private justin greer age 19 manned the turret mounted grenade launcher while the convoy took fire in the bottom of the valley. >> give me an ammo . >> here you go . >> several minutes into the fire fight greer was shot in the helmet and knocked from the turret. >> aw, [bleep] . >> oh. get up, get up. >> get up ! [bleep] man, get up.

>> your helmet saved you, man. >> hang on . everything's going to be all right. hey -- hang on, hang on . >> oh, [bleep], . >> reporter: it was only after this near catastrophe that we see the convoy's front truck is on fire and worse, the soldiers have pulled a casualty to the side of the mountain as others frantically begin to work on him .

>> later, later . >> while platoon leaders work to stabilize the patient, others provide cover and communicate with the base on radios . a soldier suffering a concussion leans against a buddy who helps him towards the vehicle. then a litter carried by four soldiers car eat more seriously wounded to the evacuation vehicle . after the most severely wounded soldiers loaded, we run to the now front vehicle

and join the soldiers initially hit in the lead vehicle . [bleep]. >> you all good? >> don't know. [bleep]. >> huge. >> private john duran also in the initial blast is showing all the symptoms of mild traumatic brain injury. this is his first possible concussion. -- his third possible concussion. >> the soldiers are still reeling physically and confused as to what happened . >> trying to get out [bleep] i hope i got that tourniquet on tight enough. >> but in a state duran pulled their driver who lost his right arm to the elbow

from a burning truck and despite his possible concussion, towns end put on a tourniquet that might have saved his life. >> once he got hit, we noticed there was a fire, smoke going up. we all wanted to get out. we were taking small arms fire and couldn't go anywhere. pretty much going down. >> come on, come on, there we go. >> you could see everything is really blury. all the smoke. eyes squinting. >> glad i did it right. >> the soldier who lost part of his arm has been stabilized and is evacuated to bagram air base . >> lehrer: you can watch the >> lehrer: you can watch the entire unedited story on the global post web site. find a link on our site, newshour.pbs.org.

>> woodruff: next, to our update on the middle east peace talks, and to jeffrey brown. >> brown: it was round two this week in a whirlwind of negotiations over several days around the region. israeli prime minister benjamin netanhayu and palestinian authority president mahmoud abbas met face to face in sharm el sheik, egypt, and in jerusalem. they were joined by secretary of state hilary clinton and her mideast envoy, george mitchell, who later fanned out for meetings in jordan and syria. the big diplomatic hurdle so far is whether the israelis will extend a temporary freeze on building new settlements. for an update on the talks, we go to glenn kessler of "the washington post," who returned with the secretary to washington early this morning.- elcome. and early means real early. >> yes, very rememberee. >> brown: welcome back. start with the moratorium on settlementsment it comes to an end at the end of the month. what is the situation now and what are the outstanding questions and where do things stand? >> the situation right now is that the moratorium has been in place for ten months.

this is something that netanyahu placed under u.s. pressure. and the idea at the time was the talks would begin almost immediately and then after ten months, if they had been succeeding, the u.s. would have hoped it that israel would have extended it. but instead, the palestinians wouldn't come immediately to the table. the talks have just started. and now you have this situation where the israelis are saying we've had it for ten months. you know, time's up. we want to move on and the palestinians who at first were very critical that the moratorium was not extensive enough, now want it to continue. >> brown: and they've said that they may not continue negotiating unless it continues. >> that's right. that has been their position. what the americans have been trying to do is to get enough momentum goinging in these last few days so that mahmoud abbas feels comfortable enough with netanyahu that he is willing to swallow a partial extension, a modified extension, something that

allows each man to say that they've won something. because of course netanyahu faces real pressure from the right wingers in his coalition to let the thing laps. >> brown: but the potential compromise here is a limited extension s that the idea? >> exactly. that is what the americas have suggested. that is what with the egyptians have suggested. and the idea is that the first thing that the two sides would tackle are borders. because if you decide that this is part is go to to be palestine and that part israel, then the settlement issue becomes less important because everybody knows some of those set-- settlements become part of israeli. >> brown: to what extent have they gotten to the tough issues, the ones that have been out there for a long time, border, security, status of jerusalem, et cetera. do we know how much they've tackled those kinds of issues. >> well, the word is that they have tackled the issues. >> it is crypt call that they have only been a few days. but what the officials have said is that particularly on

the second day of talks this week, at the prime's residence in jerusalem that the two men set together with both basically mitchell and clinton relatively silent, they sat together and they really dell of the deeply in some of these issues. it's not a question of negotiating but it was more that they got past their talking points and kind of laid out their positions and put their cards on the table. and maybe netanyahu is trying to demonstrate to abbas, i'm really serious. and you can feel trust me that we can get somewhere here. >> brown: your sense of the atmospheric though is that there is an intensity in seriousness up to these talks. >> yeah, that is the sense that at least u.s. officials and israeli officials and palestinian officials are trying to give, that even though it's been relatively-- it's relatively quick in the process, even though there is great skepticism that these will even amount to a hill of beans, that so far they're

not just dancing around. they're actually talking turkey. >> brown: what about the role of the americans at this point. when president obama and secretary clinton said they don't want to be mediators, their ideas was to bring the two parties together and let them go at it. what do we foe about their role so far, the american role, that is? >> my understanding is that the american role is more as a comfort zone for both parties. i think at the residence most of the discussion was between netanyahu and abbas, with clinton and mitchell sittinging there occasionally intersec intersect-- interjecting but not interferinging with their discussion. because ultimately it's those two men who have to make the deal. but the united states provides a comfort level for the israelis that their interest will be protected, for the palestinians, they are the tiny little small party here, so the americans provide a security blanket for them. and ultimately because the gaps are so large, it will

probably come to the united states to offer bridginging pro posals, compromises, that sort of thing. >> brown: so ultimately is my final question here, not ultimately but what's next. they have not set a date for round 3, right, for direct talks. what do you know? >> that's right. they're supposed to meet every two weeks this coming week, the jewish holiday going on. but this coming week the lower level negotiators are supposed to hash out some of these issues. presumably the following week the two men would meet. it's not anticipated that mitchell and clinton are going to be there every time they meet but that they get a process going. but you know, everyone, the funny thing about the process is that everyone knows what more or less what with the final agreement is going to look like. it's just a question of getting them to that point. >> brown: that hasn't changed for a long time, still to get to that point. >> and then implement it two. >> brown: glenn kessler, thanks very much. >> you're welcome.

>> lehrer: next tonight, a look at conservatives on the move. newshour correspondent kwame holman has our report. >> welcome to washington, d.c., the most disconnected city in all of america. >> holman: fresh off another round of victories by insurgent candidates in republican primaries this week, conservatives are feeling ascendant. >> well, we have somehow, amazingly, survived barack obama's recovery summer. but i'll tell you what i'm looking forward to. our recovery fall when we take back the house and the senate. >> holman: in a political season dominated by economic issues of taxes, spending, and the federal debt, thousands of social conservatives came together in washington this weekend to try to shift the focus back to their agenda, which for decades has energized republican politics.

that agenda includes opposing abortion rights and gay marriage. >> americans believe the government is threatening foundation of what has made america america. >> washington is assaulting america's values. the change what this nation has been to change what it is and to change what it's destined to become. >> this room is filled every year with citizens, modern patriots who are passionate about america's values. these values include the sanctity of life and the preservation of marriage. >> holman: some rank-and-file conservatives, like walter billingsley of tupelo, mississippi, feel that social issues have been given short- shrift. >> i think they have been pushed aside, and they've been separated from economic issues where they shouldn't be. and i think that's an error. you really can't separate those two.

it's very important for a country to have families that are together, that are strong. it's very important for us to have respect for human life. >> holman: others here at what organizers call the "values voter summit" agreed. virginia schuster is from reisterstown, maryland. >> i think we're concerned about both issues, the economic issues and the social issues. i think we've reached a situation in the country where the people are alarmed, scared, upset. and they're stirred up. and they're voting. >> eric lupardus came from ravenna, ohio. >> being fiscally responsible isn't just good economic policy; it's morally correct. it's morally wrong to be spending money now and make generations pay it back later. >> holman: that same message was echoed on stage today, from the line-up of republican political heavyweights who addressed the summit, such as indiana congressman mike pence. >> we will not restore this

nation with public policy alone. we it will require public virtue and that emanates from the traation dr -- traditional institutions of our nation, life and family and religion. now i know that some say republicans should stay away from these issues this year. that the american people are focused on jobs and spending and our movement would do well to stand aside. bank to win. return to the fight after the fiscal and economic crisis has passed. but we do not live in a world where an american leader can just focus on the financial ledger. >> holman: that point has been a source of tension within the republican party. mississippi governor haley barbour said last week: "any issue that takes people's eye off unemployment, job creation, economic growth, taxes, spending, deficits, debts is taking their eye off the ball. that's what the american people are concerned about."

and when south carolina's jim demint appeared at the summit this morning, he highlighted another split in the party. demint has bucked the senate g.o.p. establishment to support a number of insurgent candidates. he told the crowd principles mattered more than party. >> this no longer voting for "least worst" on the ballot. we've got candidates we can be proud of, who, when they get to washington, will stand up for americans who feel ignored. >> holman: demint has said he would rather have 30 republicans in the senate who share his conservative principles than a filibuster-proof 60 who do not. one of demint's preferred candidates is delaware republican christine o'donnell, who upset moderate congressman mike castle in tuesday's primary. o'donnell's win has given democrats new hope they can win in delaware, but o'donnell also has injected new excitement into the conservative base. she spoke to the summit this afternoon.

>> the small elite don't get us. they call us "wacky," they call us "wing nuts." we call us "we the people." >> holman: polls show conservatives are highly enthusiastic about voting this fall. the key for republicans may be to find common ground between the party's ideological purists and its political pragmatists. >> lehrer: and to the analysis of shields and brooks-- syndicated columnist mark shields, "new york times" columnist david brooks. david, how do you see the division as it's called between conservative social issues here, economic issues there, as was laid out in that piece? >> i don't think it's going to be a big problem f you looked at the glenn beck rally that mark and pri at. that was primarily-- used to be primarily a big government issue. but glenn beck was very religious. christine o'donnell, in many way come to this movement more through faith than through economics. and she was perfectly acceptable to the tea party voters and conservative

voters in delaware. and i do think the merger of economics and values has risen to the floor. one thing you hear a lot from people is they live on a block where their neighbors, they had mortgages that were underwater and they walked away from those mortgages. and people says that's a values problem as people not upholding their-- the promises they've kept. and a lot of our economic problems grow out of values problems. so in the debate, i think a lot of these things emerged. i really don't think it will be a big problem. >> lehrer: you don't think it will be a big problem, mark? >> i think it's a problem and i think you'll see it in these values voters that they feel they have 2k3w09en the short end of the stick. >> lehrer: it has all been about the economy. >> all about economics and to a great extent, the pea party movement is about economics and size of government. it is not christine o'donnell being the exception. it is not a socially cultural-based movement. in fact, it is a libertarian instinct, impulse in it to some degree. so i think there's a sense that look, we have been a major part of this coalition.

and who is even-- . >> lehrer: talking about the values. >> the values folks. just as recently as six years ago, they were central to george bush's re-election over john kerry when they put 35 same-sex marriage ballot questions on to get up and get out the vote of values voters who were opposed to same-sex marriage. >> lehrer: how do you read the primary results particularly in delaware and how the tea party influenced that and what this result means. >> right, well, the short term obviously makes it much harder for republicans to win the senate. there's no question. if you looked at the experts today and a number of them were saying maybe the republicans have like a 15% chance of winning that race. >> lehrer: in delaware. >> in delaware but of course castle t would be good odds they would winment but overall if you talk to republicans they'll say we lost a few. in '94 oliver north ran in virginia and lost to republican seat they should have won for the senate. but that doesn't mean it was a bad year, '94 for republicans. the republicans would say,

you know, we have all this enthusiasm. we've got lie turnout in primary after primary. we are riding a wave, it is not because of us t just because people want to get rid of the democrats and we're getting an unearned victory but we'll take an excess like what happened in delaware in exchange for all the support we're getting in kentucky, in alaska, in ohio. and so their view is, i think in general, that this was unfortunate for the party but if it is a trade-off, the tea party movement for the republican party is still a huge net plus. >> lehrer: is it a net flowers democrats? it has been suggested by some pundits as you know this is terrific. we can now take delaware. oh, we can now take this state and that state because the republicans nominated a tea party person. >> i don't think it is any question that democrats have privately conceded that mike cassell, the twice governor, nine times congressman and enormously popular incumbent member of congress who was defeated tuesday night would have won that seat for the republicans.

>> lehrer: fairly easily. >> fairly easily. >> lehrer: if that means anything any more. >> i think it does mean a lot. i was at his cassell headquarters on tuesday night. and the sense of support was across. i mean at least a third of the people there were democrats. i mean who supported him. so i think i would say there is a parallel to the tea party, jim. and a agree with david, it's brought increased numbers and brought greater energy. for the first time since 1930, first time in 80 years there has been a greater participation in a midterm election in republican primaries than there has been in democrats. that's irrefutable. but the parallel is this. the group, when a new group comes into the party, an insurgent group as the tea party folks are, it's comparable to what happened to the democrats in the anti-war movement in the 1970s. they come in and bring great energy. they bring great passion. there's no self-doubt. but they bring some other things as well.

they basically view any sense of cooperation with the other side as-- and to compromise is treason. and that is a striking book end. and once they win a primary, they knock off a couple incumbents as they've done. they've beaten three republican incumbent was were considered next to unbeatable in the general election. i mean bob bennett, lisa mccowski and now mike cassell. and five other times they beat the party nominee in connecticut and colorado and arizona, nevada and so forth. but-- kentucky. the key is once that happens, it sends a paralysis of terror through the regular party. and to the party leadership. and they're terrified that they are going to be tea partied. a perfect example of this, orrin hatch. orrin hatch was the-- . >> lehrer: senator from

utah. >> utah, he was mr. bipartisan. he and ted kennedy are were great friends. he spoke at his wake. since then he has become as strident and narrow a republican as there is because he's terrified that a member of the house is going to challenge him. where it is felt is in the presidential nominating process. because every nominee, it happened with the democrats in the anti-war people, because of the cause people, women people, environmental people, the first thing they want to do is they would love to have their endorsement but they don't want to make them angry. so they basically give away a lot of positions. and that is going to be the case in 2012 and the republican presidential nomination. and it's going to be-- you're goinging to see some pandering that you have seen since the democrats in the '70s. >> lehrer: do you see the history the same way. >> i do agree with the parallel with the new left. i do think it could be a problem in 2012. could be a guy like mitch daniels will just transend all categories. but i don't see it as a

problem this year. but so this year, you know, i look around. is there any evidence that the tea party is scaring off moderates are they scaringing off republicans without don't like the tea party. and i called up peter hard, the pollster, called up charlie cook, both great experts. both of them said no. if you look at the overall evidence as the tea party has surged this year, the republican party has surged. a majority of americans want the republicans to take control of congress. a majority of americans say the republicans are closer to their values than the democrats are now. republicans are doing well in poll after poll and state after state. even in connecticut now a race that is becoming close. so there has been a rise. and there's just no sign that independents or moderates are getting scared away. and the reason for that is this election isn't about the republicans. it's to the about the tea party. half the country doesn't have a view of the tea party. they haven't thought about them. this is about the economy and the hatred of washington and spending. and that's number one. everything else is way back here.

and so they don't like the republicans. they don't like the tea party, maybe, but that's not the real issue. >> lehrer: and what about the 72 parallel that they ended up nominatinging george mcgovern because of the new people. you think it's not -- >> i agree with mark on that. i think 2012 or maybe even beyond. one of the paradox of this current moment is that americans want a change of government, of who is in government but there's no evidence they want a change of policy. if you look at the policy landscape it's pretty much as it has been. >> it is the third successive election in a row. it happened in 2006, the democrats. so they benefitted. now to the ins. the one point i digress with david, andy cohut was quoted as sayinging this is the first time in history that a discredited national party will win a national landslide. the republicans are less popular than are the democrats. >> lehrer: awe as a party. >> with less confidence but they are the out that is

their one virtue is they are not in. >> they are at the lowest amount of support in history and they're probably going to win the election. >> lehrer: how do you read the elizabeth warren appointment today? >> well, a couple of things. first i think a lot of liberals are disappoint. they want her to get the full, confirmable appointment. to me, i don't have an informed view of how she will do or how she won't do. to me it is a symptom of a lot of things that are wrong in government in that there is so much gridlock in congress that presidents have to go around the normal confirmation process, go around the jobs that require confirmation and concentrate power in the white house. and every successful white house in the last five have concentrated more power in the white house because they don't want to go through confirmation. and this has been exacerbated in this white house as well. >> i am an admirer of her and her work. i don't, you know, know who can run this, if they can. and whether in fact she's somewhat inhibityed because as one of the discussions

with judy, hiring people is going to be difficult if you know that she's not going to be there. and she's not going to have that authority. but i mean there's no question she's a popular choice among the people who care passionately about this issue. and think that the administration, the white house has not been tough enough on wall street. >> lehrer: do you agree with david's overview about what twh say about the way you get things done in government right now? >> it just reinforces polarization, what will be interesting is to watch conservative editorial pages that have-- that defended the expansion-of-executive power under george bush and ronald reagan. now back pedestrianal. because this is what brackback-- barack obama is going to have to do in the next two years is by executive power and regulation. >> who are the lowliest people in washington for the last eight years, cabinet secretaries. they wait for a 25-year-old white house staff tore call them up and tell them what to do because the power is all in the white house. >> lehrer: it will stay that way. you think the liz best

warren is an a symptom of that. we talked about this before but just a couple of minutes before we go, is the president's tax cuts for the wealthy argument, holding middle class tax cuts in hoss handle-- hostage is that working. >> democrats are united on it. the congressional leadership as well as the white house, they're in sync and they're in sync with the american people. the one misstep they made was when john boehner said on "face the nation" that we vote for middle class tax cuts if he-- instead of reaching out and saying welcome, now we can embrace it and work this out, they immediately went in their campaign mode and attacked him. that isolating him even further and making him, you know, recant. >> i'm not sure how united democrats are, 31 house members and 5 senators who want to cut all, keep all the tax cuts so there is some erosion there. i guess my view is that the fight helps democrats get liberals out. but it hurts in some. more con serve difficult

districts where the blue dogs, the more moderate democrats are trying, they don't want to be in favor of any tax hike of any sort. >> they've already signed the letter. >> what about the president's point that this is against the republicans, this holding middle class tax cuts hostage, do you think that's working? >> this is the classic american argument for many elections in a row. i'm not persuaded it is a huge win. i think republicans generally are more like on taxes. >> i would say this is a year, because republicans are for even more tax cuts that we finally address what herb stein, he said let's make this the year we either get rid of the federal deficit or get rid of the idea that we're going to get rid of the federal deficit. >> then let's repeal the middle class tax cuts. >> but the $4 trillion in new extended deficit, mr. mcconnell is advocating. >> lehrer: we have to go. thank you both >> woodruff: again, the major

developments of the day: president obama appointed elizabeth warren to set up a new consumer financial protection agency; hurricane karl plowed into veracruz, mexico, causing widespread damage; and afghan president hamid karzai urged voters to turn out tomorrow in parliamentary elections. but taliban militants threatened violence. and to hari sreenivasan in our newsroom for what's on the newshour online. hari. >> sreenivasan: there's more from shields and brooks on "the rundown" later tonight. paul solman offers his analysis of elizabeth warren's role as a consumer advocate on his "making sense" page. a follow-up on the gulf oil spill. we talk to a scientist who is examining how bacteria deep underwater are gobbling up natural gas released by the leak. and on "art beat," jeff interviews author gary shteyngart about his new novel "super sad true love story." all that and more is on our web site, newshour.pbs.org. judy. >> woodruff: and that's the newshour for tonight. on monday, we'll look at the power of sarah palin in g.o.p. politics. i'm judy woodruff.

>> lehrer: and i'm jim lehrer. "washington week" can be seen later this evening on most pbs stations. we'll see you online, and again here monday evening. have a nice weekend. thank you and good night. major funding for the pbs newshour has been provided by: and with the ongoing support of these institutions and foundations. and...

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